In this week’s weekly recap we look at what is happening in Syria, how it differs from Libya, and recap the situation Gazprom now finds itself in thanks to the US shale gas boom and the fracking revolution.

The level of US intervention in a conflict is almost always determined by oil and gas. The US is not getting involved in Syria, other than through back channels, precisely because Syria has little in the way of oil resources, and what it does has is the purview of France’s Total. Thus, France has been the most vocal about intervention in Syria; it has assets to protect. This is also why any governments who wish to help the Syrian rebel cause are funneling money through France. Herein lays the main difference between Syria and Libya, which is rich with oil and thus was ripe for fast intervention. It is also why Italy was the first to light the fuse in Libya—to protect its ENI assets.

What happens in Syria next will be of immense geopolitical significance and will involve a host of countries and micro and macro balances of power, from Iran, Iraq, Turkey, Lebanon, Israel, Egypt and Jordan most pressingly, and Russia and the US indirectly. But it’s too complicated and there are too many variables to predict all the potential outcomes, so intervention on this level is diluted. Washington is scrambling to help the “Free Syrian Army” to collect “donations” for the purchase of weapons and other equipment, but the funds have not been as forthcoming as hoped. Still, the rebels remain unrelenting, despite disunity in their ranks. What will unfold in the aftermath--understanding that the genuine rebel forces have been dangerously infiltrated by various extremist groups with diverse agendas--will help determine any shift in the balance of power in the Middle East. Everyone’s actions are equally muddled, from the Americans and the Saudis to the Iranians and Israelis.

In recent days, things have become more complicated, particularly with Turkey in a tough spot supporting the rebels but fearing the empowerment of militant Kurds on its southern border in the process. To keep Turkey happy, the Syrian rebels appear to be lashing out now, violently, at the Kurds. This is a bad omen. External forces were hoping to bring the Kurds into the rebel fold against Assad, with vague hints at Kurdish independence. Now this new front line has been more clearly drawn. The Kurds will hinder the rebel cause and Turkey will be forced to fight back. While Syria itself cannot affect the oil and gas market, the geopolitical changes of the scale that will unfold can, and will.

Meanwhile, in Libya, the recovery of oil production is insecure at best, despite the variety of optimistic reports that came to a very abrupt halt when the US envoy to Libya was murdered in an attack on the consulate in Benghazi. Even before this, though, intimations that the revolution in Libya had been a success were tainted by the reality on the ground: Libya is today a chaotic mess of countless, uncontrollable militias and the new government certainly is not in control.

Another gas-related geopolitical dynamic we will be closely following for you in the coming weeks and months will be those nipping at the heels of Russia’s Gazprom, which as Oilprice.com detailed earlier this week, has become hostage to the US shale gas boom. Europe has suddenly become brave in the face of its gas captor, and continued low gas prices will help it maintain courage. Gazprom has already announced a restructuring of its finance and logistics assets in Europe, though it will deny that this was a result of any pressure by the investigatory forces in the European Commission.

Though the US is presently dithering over the issue of regulations that hinder natural gas exports, stalling a decision until after the elections, we believe that we are on the edge of a bonanza of US natural gas exports, which will help further chip away at Gazprom’s stranglehold on Western Europe, and particularly on Eastern Europe—the geopolitical implications of which are extremely beneficial for the US.

This week’s investment special details progress toward the creation of a viable drought-tolerant corn seed. The timing here is significant: DuPont has just announced a promising increase in yields, having had the convenience of a drought on which to experiment.

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Philip on October 06 2012 said:

I'm afraid that I disagree about your assessments with regard to US gas exports and Gazprom.

I think it is far too simplistic to argue that US gas exports will just take over from Russian gas exports. In facvt the arguement that both Oilprice and Jen Alic have put forward is a little on the simplistic/sensationalist side of the information spectrum.

It takes little account of how Russian influence works in Europe. It takes little account of the complexities involved in supplying gas to 27 EU countries that rely on estsblished networks of gas supply. It does not take into account how long Europe has been receiving Russian oil and gas, and how the Russian supply is tied into European economics and politics.

In fact if I were just a little cynical I'd say that the fact that Jen Alic's article used the word 'scared' and Oilprice's reporting seemed to be ebnthusing about this US gas supply seemed very 'Cold War' to me, very Romney (the Russians are still the enemy...).

Whastever the US does (turning towards the Asian-Pacific area etc.) Europe still has to live with the Russians permanently. Persionally I'd rather make the best of that situation esp. with the Germans turning East, than rely on the whims of US policy to determine where US interests lie. That goes for gas supply as well as politics.

One day it might be Russia that rescues Europe from oblivion into a Eurasian Area to compete/face up to China. The US will have to deal with China in its own way. The ME will likely be supplying East and South Asia more permanently than Europe.

Once the world of globalisation becomes China and Asia-Pacific cenric rather bthan Euro-Atlantic centric, we in Europe will be buying Russian supplies in order to stsy alive and viable in this transforming world. We will have no choice but to go with Russia to help develop Eurasia in the face of China.

That is why, whatever US gas is available for export, geopolitically Europe will need to go with Russia, or become a backwater in the world. That is the European reality, in my opinion.

Filipe on October 07 2012 said:

China is dealing with Gazprom's bullying very well. And it will get better as time goes by. Europe is getting better at defending herself too.

Russia is the poster child of dysfunctional former superpowers. The corruption just never stops, and the decay penetrates too deeply for any chance of long term recovery.

Fracking is finding its way into tight rock petroleum fields from South Africa to Russia to China to Japan. Other than being the site of origin, the US has little enough to do with that coming wave of change.